The New Jersey state government apparently doesn’t have the extra billions of money to spend collecting more taxes and getting lots of federal funds, not if it pays its bills. It turns out that the state has been running into debt at a record rate, well beyond its so-called surplus.
This was made clear in an audit of government debt and bonds for fiscal year 2021, the one before this fiscal year which will end on June 30 and the most recent to be audited.
The audit caused a shock – the state’s total debt increased by $44 billion from the previous year. In keeping with the government’s familiar practice of trying to bury bad news, the Murphy administration released the audit report just before Memorial Day weekend, thus ensuring minimal coverage.
New Jersey has long been one of the most indebted states in the country. A year ago, it borrowed and pledged to pay a total of $248.6 billion, ensuring its crushing burden on taxpayers will continue long into the future.
Part of this debt increase is due to panicked borrowing during the pandemic by the Murphy administration and Democrats in the Legislative Assembly. They worried that shutting down the state’s economy would reduce their tax levy on businesses, but when the state reopened, they got an offsetting windfall. They haven’t paid it all back yet.
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The lion’s share of the debt went to former state employees. The audit showed a $36 billion year-over-year increase in what the state calls “other post-employment benefits.” Among these are the very generous health benefits that retired New Jersey employees receive in addition to their outsized pensions. Typical working families receive no retirement health benefits from their employers.
Part of that increase stems from the surprisingly higher cost of medical claims made by retired state employees and higher Medicare Advantage costs, according to NJ Spotlight.
Earlier last month, before the audit was released, officials appearing at budget hearings told state senators that the Murphy administration had “significantly reduced our debt burden while ensuring real savings for taxpayers.” This prompted Republicans to complain that Governor Phil Murphy and Democrats were not being honest about New Jersey’s financial situation. Sen. Michael Testa, R-Cape May, Cumberland, Atlantic, said in a letter to Senate Budget and Appropriations Committee Chairman Bergen County Democrat Paul Sarlo that the audit “couldn’t care less” about the claims administration. Testa urged Sarlo to bring Treasurer Elizabeth Maher Muoio before the committee to explain this “gross misrepresentation of the state’s long-term debt”.
The Legislature and Murphy are required by law to agree on a budget for the next fiscal year before it begins Friday, July 1, a deadline they meet. But instead of another spending spree and increased funding for government members’ lavish pensions, they should have used much of their multi-billion “extra” dollars to cut the unexpected $40 billion addition. dollars to taxpayers’ debt burden.